National Savings & Investments, the government-backed savings bank, today announced it will push up interest rates on some of its savings accounts at the end of the month, as it scrambles to meet the government-set net financing target for its financial year.
As of 29 December, the interest rate on NS&I’s Direct ISA, Direct Saver and Income Bonds accounts will all be increased to 0.35 per cent, up from 0.1 per cent, 0.15 per cent and 0.15 per cent respectively.
In recent years, the Treasury-backed bank has represented the last bastion of competitive savings rates in the UK, but slashed its rates sharply last November from market-leading, to levels like 0.01 per cent on its income bonds, in order to shift billions worth of savings it had amassed over lockdown.
A period of heavy outflows that followed pushed the bank below its net financing target for the year.
This year, today’s move is the second time in two months that NS&I has hiked rates on its accounts.
Last month, it increased rates on its popular Income Bonds from 0.01 per cent to 0.15 per cent.
“The decision to increase the interest rates on these products is in order to help NS&I meet its annual Net Financing target,” the bank said in a statement today.
In the last budget, the government set NS&I’s net financing target for 2021-22 at £6bn, in a range of £3bn to £9bn. But in October, NS&I revealed its year-to-date total net financing performance was just £0.6bn.